John Milliken VP Operations at Bayonne Packaging - Case Study Example

MBA 5503 Case Study Exam Questions Name: Click here to enter text. ID: Click here to enter text. John Milliken – VP Operations at Bayonne Packaging John Milliken has a tough challenge ahead of him. Bayonne Packaging president, Dave Rand, has asked him to analyze Bayonne’s operations and present recommendations by the end of the week. New to the company, Milliken has now reviewed operations and activities. Below are four questions to address in the role of John Milliken. Please answer your questions by typing in the spaces designated between the lines. Add as much space as required for each question. Each question is worth equal weight: 20%. Please address each question in the corresponding space provided in this file. Edit your answers in this file as the edit time will be tracked in file properties. It is important that you work in this file only. Please note that the track changes feature is enabled. This feature is also important to ensure integrity of answers. For easier editing, you are able to change the edit tracking view under the menu tab “Review – Tracking – Final” option. It will be easier to work with the document in the view “Final” mode as opposed to view “Final: Show Markup” mode which shows all changes made while editing. When you have completed the exam exercise, save the file in its Word document format (do not convert to PDF) and email your submission as an attached file to pbeede@hct.ac.ae. Submissions are due by or before 11:00pm Wednesday evening, 28th May. Exam Questions 1) Process design … flowcharting the work process Having reviewed the flow of product from raw materials to finished goods, John Milliken now has a thorough understanding of the entire work process. With this knowledge: a) Outline or illustrate the workflow process in a flowchart format. How does product flow through the entire conversion process? b) Identify a current key issue in the workflow process. What is the issue and what information do you have to support your opinion? Answer here … a) The sales department sets the price of the products aggressively to increase more sales volume. The production department and the composition department develop the package and print designs for the orders. The department also finalizes printing plates and die-cutting dies ordered. The print department prints the sheets. The Dye-cut Department afterwards cuts the printed sheets into blanks and the printed paper that are afterwards folded into the finished product. The Finishing Department does the scheduling of products for delivery and scheduling what needs to be done. The Quality Control Department oversees that quality standards are met to meet the stated standards. b) The current key issue in the workflow process is lack of clear workflow processes due to unfavorable communication culture. From the case, it is clear that individual department namely sales management, Fold and Glue, Scheduling, Composition, Sheeting, Printing, & Die-Cut and Quality Control operate rather separate from each other just for the need to keep the products flowing without giving regard to coordination with other departments. The departments, operated independently from each other. Underlying issues such as lack of communication between the departments aggravate this. For instance, managers tend to make autonomous decisions without giving regard to the effects their decisions would have on other departments in the production chain. Further, there is a conflict between the sales department and the production department. 2) Improving quality … TQM What do you feel is the most significant issue affecting Bayonne Packaging: a) The rate of scrap product currently affecting production b) The rate of partial orders shipping to customers (and as a result, partial late shipments) c) The rate of reject products being returned from customers after delivery Select one issue you believe to be the most significant contributor to Bayonne’s performance problems. Explain why this issue is impacting company performance and the most important to address quickly. Support your opinion/logic with information available in the case. Answer here … a) The current key issue in the workflow process is lack of clear workflow processes due to unfavorable communication culture. From the case, it is clear that individual department namely sales management, Fold and Glue, Scheduling, Composition, Sheeting, Printing, & Die-Cut and Quality Control operate rather separate from each other just for the need to keep the products flowing without giving regard to coordination with other departments. The departments, operated independently from each other. Underlying issues such as lack of communication between the departments aggravate this. For instance, managers tend to make autonomous decisions without giving regard to the effects their decisions would have on other departments in the production chain. Further, there is a conflict between the sales department and the production department. 3) Lean management principles Given the batch process inherent in Bayonne’s production structure, how might you introduce an improvement based on a lean management process? In reviewing Bayonne’s operations, recommend one key lean management process you would implement. Explain what that process should be, how you would implement it and what benefit should result. Answer here … A review of Bayonne’s process and the workflow shows that the company produces defective products (6 percent), resulting in scrap and rework and which adds significantly to the cost of production. Lean centers on preventing such defects rather than improving processes. Lean implementation involves using value streaming mapping, the organization is reorganized to ensure flexible work systems, in regards to standardization, sorting, systematic cleaning, straightening and sustaining. Cultural values In implementing the lean management process, a revolutionary shift in the manner in which work is conducted at Bayonne is essential. This would require ensuring that a smaller number of employees take wider range of responsibilities to ensure meaningful commitment to reduction of wasteful products as well as changing their work processes. It would further involve reworking bonus and incentive structures in order to reward behavior and innovative ideas that are seen to minimize production waste and cost. These would demand genuine buy-in at all stages of the company, from Bayonne’s executive management would have to front line machine operation staff. True lean would comprises focusing on the people within the organization and creating a culture that empowers workers at all levels to effect innovative changes that promote productivity by minimizing waste. This would mean creating flexible learning environment to train the workers on minimizing waste and promoting collaboration and consensus among departments. Technological values In implementing lean manufacturing, it would require having substantial investment in technology, ranging from production system to the use of analysis software to monitor the quality improvement in the Fold & Glue Department, which has mostly been affected, as well as other departments. At this stage, a key tent of lean manufacturing is automating each production as much as possible and making the company more reliant on technology. In which case, purchase of more machinery at the Fold & Glue Department to handle highly pressuring demands from customers is essential. 4) Sales forecasting issues Dave Rand has told John Milliken that “sales are up – we have to run two shifts now.” Obviously, higher production costs are one implication of the increased sales. Could the growth in sales have been predicted? Sales forecasting is an important tool to aid production planning. Relative to sales forecasting at Bayonne Packaging: a) How would you describe the main sales growth and historic pattern Bayonne has experienced – a trend, cycle, seasonal or random? Why do you describe it that way? b) Aside from increased production costs related to running a second shift, what is another increased-cost impact related to unpredicted sales? How could better sales forecasting reduce this expense item? Answer here … a) Bayonne’s main sales growth can be described as random fluctuations. This is since the company experiences rapid rise in sales growth, before slowing and falling suddenly due to internal production factors. Random fluctuations occur in a short period of time because of unpredictable factors, such as change of customer attitudes due to poor designs or defective product. Hence, the predicting the growth in sales was unlikely. Bayonne’s income had been on the decline since 2009 despite the sale growth. This indicated inefficient operation system, which has increased cost of goods sold. Additionally, the diminishing increase rate in the 2010 gross sales indicates that the customers may have been dissatisfied with Bayonne’s product. Later, the net income decreased by 43.47 percent due to the growth in the rate of customer rejects. This decreased the gross sales. b) The direct cost of inventory in the sales department is clearly one of the increased-cost impact, related to unpredicted sales. For instance, loss of sales because of unavailable inventory could be referred as cost of inventory. Bayonne’s sales department drives its inventory. Hence, sales present the company with the necessary information to procure the necessary raw materials for production. Therefore, having a more accurate sales forecast implies that the company would ultimately buy the correct amount of inventory. On the other hand, inaccurate sales forecast implies that the company would purchase too much of little inventory. In which case, too little inventory would imply that Bayonne misses out on its opportunistic sales. The solution is therefore having the correct sales forecast to offer more realistic raw material and parts requirement. 5) Recommendation to Dave Rand Having reviewed the entire operations from raw materials to finished products shipped to customer (and some rejects returned!), what should John Milliken recommend to Dave Rand? In particular: What specific recommendation would you make at the end of the first week? How will your recommendation improve performance? What evidence or information supports your point-of-view? Answer here … John Milliken should recommend to Dave Rand that: Bayonne should restructure its operating system by introducing job-rotation method of work design as a short term solution, while pursuing long-term changes such as organizational culture change. The method will promote interdepartmental relationships. Additionally, since the company is in the process of penetrating new markets, having a more codified and coordinated operating system would be necessary. At the same time, job-rotation method is essential since the company requires appropriate management competency. Hence, the method would provide more efficient method of managing the departments in the first initial works as it revises the existing strategy and identifies a clear vision statement. The company should also revise its existing corporate culture. The existing culture reduces the company’s operation efficiency. From the case, there is evidence of insufficient communication among the members of the board, as well as among the departmental managers in analyzing issues that face the company and to come up with appropriate solutions. Additionally, the employees seem to care about their own jobs rather than assumptions and personal assumption. The company should also outsource delivery to the customers, as it is more beneficial and cost-effective than giving employees rewards. Through outsourcing, the company will get to channel its human resources and capital to the departments with insufficient staff. The capital resources should as well be channeled towards buying additional machinery as well as hiring extra staff to maintain the old machinery at Fold & Glue Department. This will contribute to improved quality of products by minimizing the number of defective products. This is specifically beneficial as the company struggles with quality issues, as the packaging have excess or lack of glue. Additionally, 6 percent of the products are scrapped because of being defective. At the same time, 1 percent of the products suffer customer rejection because of quality issues. END OF PAPER Read More